How will the new Insurance Act 2015 affect you?
The Insurance Act 2015 is a move to modernise how insurers approach the key policies for your business. Coming into force on 12 August 2016, the new act will seek to re-balance your rights – and the remedies available when things go wrong.
While full disclosure by you as the insured party remains central to the new regime, it also compels insurers to be proactive about making distinctions between material and trivial facts. Importantly, what that does is give you more protection against claims that are rejected by your insurer on a technicality that isn’t germane to the claim. We think it will make for healthier, more intelligent insured/insurer relationships and will give you a stronger say at the moment of truth.
At-a-glance analysis: the main changes …
Duty of fair presentation replaces duty of disclosure
Disclosure of circumstance and risk factors remain at the core of the new act – of course insurers must still be confident about the level of risk they take on in any given commercial situation. However, there’s a subtle but important shift of emphasis in the new legislation:
• Your primary duty as the insured still includes disclosing material facts you know or ought to know.
• In the absence of full disclosure you need to disclose sufficient information that alerts – and under the legislation compels - a sensible insurer to dig deeper. This places the onus on your insurer to be more proactive and not simply base your policy terms on assumptions and a one-way flow of information.
• Effectively the act says it’s unreasonable for an insurer to assume that the policy purchaser in your business has every single material fact to hand – possibly from a multitude of internal sources. Therefore the act defines ‘ought to know’ as including senior management knowledge, the insurance buyer’s knowledge and other information held elsewhere in your organisation that could be established by a reasonable search.
• Then there’s the presentation of the facts themselves: the information you disclose must be done so in a way that gives a clear indication of risk and circumstance to a prudent insurer. This prevents disclosure submissions that are too brief – and submissions that are a blizzard of un-signposted data.
• The act also recognises that insurers will already hold information about the risk itself, how it relates to the work your firm carries out or the sector in which you work – or the risk profile of your firm if they already insure you. In other words, it’s all about a balance of information that delivers a more rounded, realistic and relevant picture of risk. Your insurer will have to take on partial responsibility for validation and assessment - and that’s good news for you.
To read the full report from our partner Arthur J Gallagher click here on the picture above.
Post date: 21 Sep 2015
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